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Court provides road map for awarding costs for unbundled legal services

Man who spent $400K in family litigation to pay $90,000 to ex-spouse
|Written By Yamri Taddese

A family court litigant was successful in getting costs she incurred for unbundled services from several lawyers in a case a Superior Court judge described as an example of the courts “struggling to determine entitlement and quantum of costs.”

‘There has to be some attention to the fact that the party who could afford court can abuse the system,’ says John Schuman.

But in what some lawyers say will be a road map for future cases involving unrepresented litigants who occasionally make use of counsel, Justice George Czutrin said the courts must be ready to consider partial retainer costs as more and more people seek unbundled services from lawyers.

“Lawyers and the Law Society of Upper Canada now recognize limited scope retainers or unbundled legal fees as one way to attempt to address access to justice and legal representation,” wrote Czutrin in Jordan v. Stewart on Aug. 15.

“Consistent with this need, courts addressing costs should consider bills of costs certified by lawyers who have provided assistance, even if not on the record throughout the case.”

Czutrin’s endorsement comes in a case in which the largely unrepresented litigant was victorious against a former spouse who had a lawyer and spent nearly $400,000 to argue an application for termination of child support.

Czutrin ordered the father, James Rupert Stewart, to pay his ex-spouse Cheryl Ann Jordan $90,00.

“I’ve never seen a higher one for an in-person litigant,” says Toronto family lawyer Harold Niman.

“That’s an unusually high amount for an in-person litigant,” he adds. “The case specifically addresses the issue of calculating the cost of an in-person litigant who has been successful. There have not been cases on that issue and certainly nothing of the magnitude that was ordered in this case.”

Czutrin’s cost order in favour of the mother covered the legal tabs of several lawyers whose assistance she sought from time to time.

John Schuman, a certified specialist in family law at Devry Smith Frank LLP, has at times provided unbundled services to family law litigants.

“It’s an economic reality for most people,” he says.

“They just can’t afford to have a lawyer throughout the process. When the people go to court and say, ‘I can’t afford to have a lawyer here but I spoke to one,’ . . . then judges are more receptive to those litigants and give them some reimbursement for their legal fees.”

Czutrin’s decision is one other judges will spend a lot of time reviewing when it comes to deciding cost awards for successful in-person litigants, says Schuman.

“It’s the first really substantive decision I’ve seen on costs for unbundled services,” he notes.

In this case, the lawyer who assisted Jordan at different times provided bills of cost. It’s a much more efficient way of dealing with costs in such situations than having the client simply include partial retainer costs in a list of disbursements, says lawyer Kumail Karimjee of Karimjee Greene LLP.

“This does not provide the court with sufficient detailed information in support of a costs claim. How can you tell who did what on the file [or] whether there is duplication?” he asks.

And when litigants have reduced their overall costs by seeking unbundled services, “in my view courts should consider full indemnity for counsel fees,” Karimjee adds.

In addition to the counsel fees for largely unrepresented litigants, the decision also considered weather parties without counsel get compensation for the work they did on their own file that a lawyer normally would have done.

When Jordan tried to claim costs of this kind, the judge didn’t grant them.

“She would not be compensated for this time in any costs award,” wrote Czutrin.

“I have no satisfactory evidence to quantify her claim for her time that would have otherwise been done by counsel or that she may have been charged for had she been represented in addition to the assistance she received outside of the bills of costs that I have considered and for which she will receive costs.”

Karimjee believes in-person parties in such scenarios should docket the time they spend on tasks normally done by counsel.

“This is not easy for self-represented parties who are not accustomed to docketing like lawyers do,” he says.

“Ideally counsel providing unbundled services will ask self-represented parties to track the time spent on tasks a retained law firm would normally complete such as legal research, drafting court documents, preparing examinations, and argument.”

The case is also an example of using costs as a sanction when the court feels a litigant has improperly used its resources, according to Niman.

In what could perhaps be a warning to wealthy litigants who are willing to bring financial ruin to their opponents even at great expense to themselves, Czutrin found Stewart’s excessive spending in this case was in bad faith and “defies logic.”

“While I cannot conclude that the father in this case deceived the court in any manner, his willingness to spend money on legal and expert fees so out of proportion to any economic benefit defies logic,” he wrote.

“The reasonable conclusion is that the father was prepared to cause financial harm to the mother and his son even at incredible expense to himself. He certainly never expected to recover his costs.”

At the end of the “long, drawn-out” litigation, each party was claiming to be the winner. But when deciding who should get compensation for litigation costs, the judge found the successful party was in fact Jordan.

But in a demonstration of the court’s discretion when it comes to awarding costs, Czutrin made it clear that even if Stewart were the successful party, he would have ordered costs to Jordan since she was willing to mediate.

“The mother made multiple offers: an initial offer to mediate, then to dismiss the father’s motion when it first commenced, and finally an offer of reduced support with releases,” wrote Czutrin.

“The offers were all reasonable when made and worthy of the father’s consideration, and would have been far more financially beneficial to both parties than what transpired. His failure to consider and make serious settlement efforts I find unreasonable.”

The consideration of mediation is an important issue, notes Schuman.

“What happens in some of these cases is the person with the money drags the other person to court where it could be the most expensive process to resolve,” he says. “Court is more expensive than mediation, more expensive than arbitration, and more expensive than collaborative.

“There has to be some attention to the fact that the party who could afford court can abuse the system.”

Patrick Schmidt, counsel for Stewart, was unavailable to comment.

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